Carlyle Group LP’s acquisition of TCW Group Inc. won’t be put on hold pending the outcome of an arbitration case by EIG Global Energy Partners LLC over its claim that it has the right to block the transaction.
U.S. District Judge Christina Snyder in Los Angeles yesterday issued a ruling that TCW’s interest in a fund that it jointly owns with EIG will be held in a trust separate from the other TCW assets if the sale closes before the arbitrator has ruled on the conflict.
“We are gratified by the court’s ruling allowing the Carlyle transaction to proceed as scheduled,” Peter Viles, a spokesman for Los Angeles-based TCW, said in a phone interview. “We look forward to closing the transaction on a timely basis.”
EIG, an asset management firm that used to be part of TCW sued in August to block Carlyle’s acquisition of TCW from Societe General SA before an arbitrator had ruled on its claim. The acquisition would give Carlyle, a direct competitor in energy investments, access to EIG’s sensitive information, the company said in its complaint.
Snyder in her order agreed that EIG “has a strong likelihood of success on the merits” of its claim that a supermajority of the board of its joint venture with TCW needs to approve a change of ownership of the venture’s members. The judge denied EIG’s request to prevent the sale from closing before the arbitrator rules on its claims.
$4.2 Billion Fund
EIG controls the board of the joint venture that runs a $4.2 billion energy investment fund. The company sought arbitration after Carlyle agreed to buy TCW on Aug. 9.
“We’re obviously very pleased with the court’s decision and agree completely with the court’s analysis of the law and facts at issue in this matter,” EIG Chief Executive Officer Blair Thomas said in a statement. “It’s unfortunate that it has come to this but each of TCW, Carlyle and Société Générale were fully aware of this issue when they decided to recklessly announce a transaction that infringes upon our rights.”
The case is EIG Global Energy Partners LLC v. TCW Asset Management Co., 12-07173, U.S. District Court, Central District of California (Los Angeles.)